In this week’s edition of Economy and Society:
- OCC finds nine major banks engaged in debanking practices
- Federal judge declines to block Trump's DEI order for government contractors
- Republican state financial officers questioned credit rating agencies' use of ESG criteria
- California finalizes November deadline for corporate emissions reporting
- European regulator sets ESG reporting enforcement priorities for 2026
- Report finds banks pulling back from climate commitments
In Washington, D.C.
OCC finds nine major banks engaged in debanking practices
What’s the story?
The Office of the Comptroller of the Currency (OCC) released a report on Oct. 14 examining policies and practices at the nine largest national banks it supervises between 2020 and September 2025. The OCC said those policies may have influenced decisions to deny or limit financial services based on customers' political or religious beliefs or lawful business activities.
Banks have argued that decisions to restrict financial services reflect legitimate business and risk-management considerations. The OCC said that some of these decisions amounted to discrimination.
The banks were JPMorgan Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, Capital One, PNC Bank, TD Bank, and BMO Bank. The OCC reviewed nearly 100,000 complaints and about 420,000 pages of bank documents.
The report identified two categories of policies associated with debanking. The first was broad reputation risk policies, which the report describes as concerning the potential for economic or brand harm to a bank from negative public perception of a customer relationship. The second was industry-specific restrictions, including on Arctic oil and gas exploration, coal mining or coal-powered plants, firearms or ammunition, detention facilities, tobacco and e-cigarettes, and digital asset activities. The report also cited some banks' environmental and social risk management policies in individual decisions.
In its news release, Comptroller of the Currency Jonathan Gould said, “Today’s report provides irrefutable evidence that the nation’s largest banks have denied, debanked and discriminated against customers and lawful businesses.”
The Cato Institute questioned the report's conclusion, writing that "To be fair, the OCC disclosed that the list provided is not comprehensive, but it’s hard to land on the “irrefutable” conclusion that systemic discrimination against conservatives and Christians is taking place in banking when that’s the only evidence being offered."
The OCC report does not carry the force of law or constitute a binding legal finding.
The Consumer Financial Protection Bureau (CFPB) said the same day it would investigate the banks. In a statement, CFPB Acting Director Mark Paoletta said “The CFPB will fully investigate whether the institutions featured in OCC’s report and others have complied with federal consumer financial laws and take appropriate action.”
Why does it matter?
The report could lead to further federal changes in how banks weigh reputational, political, and ESG-related factors when deciding which customers and industries to serve.
Comptroller of the Currency Jonathan Gould said “Notwithstanding certain efforts by the largest banks to rein in these practices, I am not confident that they will be enough. Accordingly, the OCC will be assessing further changes to the regulatory and supervisory framework applicable to the largest banks to reduce the likelihood of these harmful practices recurring in the future.”
The report also said the OCC could not quantify the full extent of debanking across the nine banks.
What’s the background?
President Donald Trump (R) signed Executive Order 14331 on Aug. 7, 2025, directing federal banking regulators, including the OCC and CFPB, to address what the administration described as politicized or unlawful debanking. The OCC began its review in September 2025 and released preliminary findings in December 2025.
The report included examples involving organizations across the political spectrum. It said JPMorgan repeatedly declined, between 2021 and 2023, to provide commercial financial services to a politically conservative-leaning retailer. It said Capital One in 2023 declined a potential primary banking relationship with an organization supporting abortion, citing its risk appetite. It also said TD Bank declined to move forward with a second COVID-era small-business loan for an organization supporting stricter immigration policies, citing in part the Southern Poverty Law Center's allegation that the group was a hate group. The nonprofit later withdrew its application.
JPMorgan said its policies prohibit discrimination based on political or religious views and that the OCC cited a limited number of historical interactions. The bank said it has since improved its practices.
Ballotpedia tracks government efforts to restrict companies from discriminating against certain businesses or industries as part of its coverage of anti-boycott approaches to ESG reform. Ballotpedia also tracks other federal ESG-related policies during the second Trump administration.
Federal judge declines to block Trump's DEI order for government contractors
What’s the story?
U.S. District Judge Adam Abelson, nominated by President Joe Biden (D), of the U.S. District Court for the District of Maryland denied a request on Oct. 14 to temporarily block President Trump's (R) March 2026 executive order prohibiting federal contractors from engaging in diversity, equity, and inclusion (DEI) activities that the order defines as racially discriminatory. The judge concluded that the organizations challenging the order had not demonstrated that they were likely to succeed on their constitutional claims.
Executive Order 14398, Addressing DEI Discrimination by Federal Contractors, defines the prohibited activities as disparate treatment based on race or ethnicity in recruitment, employment, contracting, program participation, and resource allocation. The required contract clause also obligates contractors to provide information and access to records on request and allows agencies to cancel, terminate, or suspend contracts for noncompliance. The order separately directs the attorney general to consider False Claims Act actions against violators.
The plaintiffs, including organizations representing higher education employees and federal contractors, argued that the order was overly broad and vague, restricted constitutionally protected speech, and violated the First and Fifth Amendments. They also sought to block an April 17 memorandum from the Federal Acquisition Regulatory Council implementing the order.
Abelson denied both requests, concluding that the plaintiffs had not established grounds for preliminary relief. He interpreted the order as prohibiting only intentional discrimination already barred under federal law and applying only to work performed under contracts containing the required clause.
Why does it matter?
The ruling allows the Trump administration to continue implementing the order while the court's reading of its language limits its scope.
Judge Abelson wrote in his opinion, "the Contractors Order only prohibits contractors from engaging in conduct that is already prohibited by federal law: intentional discrimination on the basis of race or ethnicity."
The decision does not resolve the underlying lawsuit. Abelson also indicated that contractors could bring challenges to specific enforcement actions if the government applies the order to constitutionally protected speech or conduct outside its scope.
What’s the background?
Trump signed Executive Order 14398 on March 26, 2026, as part of his administration's broader efforts to restrict DEI programs involving federal funding and contracting. The plaintiffs filed their lawsuit on April 20.
The order followed earlier executive actions, including Executive Order 14173, issued Jan. 21, 2025, which required federal funding recipients to certify compliance with federal antidiscrimination laws. In National Association of Diversity Officers in Higher Education v. Trump, the U.S. Court of Appeals for the Fourth Circuit ruled in 2026 that the certification requirement did not facially violate the First Amendment because it required compliance with existing federal law. Abelson relied on that precedent in his Oct. 14 decision.
Separately, a coalition of 19 states and the District of Columbia filed a lawsuit on June 10 challenging the implementation of Executive Order 14398. That case, Maryland v. Hegseth, remains pending and was not resolved by Abelson's ruling.
In the states
Republican state financial officers questioned credit rating agencies' use of ESG criteria
What’s the story?
Twenty-two Republican state financial officers from 17 states sent a letter on Oct. 14 to Moody's, Fitch Ratings, and S&P Global Ratings questioning their use of environmental, social, and governance (ESG) considerations in credit ratings. The state treasurers, auditors, and comptrollers argued that the agencies rely on speculative climate-related predictions and inconsistent methodologies that could harm state finances and investments. The officials also addressed the letter to Securities and Exchange Commission (SEC) Chairman Paul Atkins and two SEC division directors.
The officials said that the agencies relied on false predictions of a rapid transition away from fossil fuels and government policies penalizing carbon emissions. They argued that these assumptions could lead agencies to assign lower credit ratings to oil and gas companies by overstating the financial risks associated with their operations.
The officials also cited a retracted 2024 Nature study to challenge the reliability of climate-related financial risk projections. They further alleged that S&P downgraded American oil and gas companies based on ESG risks while maintaining A+ credit ratings for two Chinese state-owned oil and gas companies.
The letter asked the agencies to explain how they incorporate climate-related risks into ratings, whether they have adjusted their methodologies, and why they have not reversed certain downgrades. It also questioned Fitch's reliance on the Inevitable Policy Response climate forecast and asked Moody's and S&P about their ESG commitments and whether those commitments should have been disclosed as potential conflicts of interest in SEC filings.
Why does it matter?
Credit ratings help determine borrowing costs for state and local governments and businesses. The officials argued that incorporating ESG-related assumptions into ratings could lead to unwarranted downgrades, increase borrowing costs, and reduce the value of investments held by state pension funds.
The 22 officials said in the letter, "Ratings agencies' use of false ESG predictions harms States' credit ratings and stock holdings, threatening States' ability to pay for roads and schools, as well as pensions for police officers, firefighters, teachers and other employees."
Utah Treasurer Marlo Oaks (R) said, "Credit ratings should be grounded in objective, consistent financial analysis, not political assumptions about the future."
What’s the background?
State officials have challenged ESG considerations in credit ratings for several years. In 2022, groups of officials from Utah, Idaho, and Kentucky raised concerns about S&P's ESG credit indicators for state and local governments. S&P discontinued its alphanumeric ESG credit indicators in August 2023, but the Oct. 14 letter argued that climate-related assumptions continue to influence credit assessments.
The letter cited S&P's consideration of transition risks in Alaska, New Mexico, Pennsylvania, and North Dakota; Moody's assessments involving Louisiana, Alaska, North Dakota, and Wyoming; and Fitch's assessments involving Alaska, West Virginia, and Oklahoma.
In April 2026, Republican attorneys general from 23 states questioned the three agencies about whether ESG considerations influenced credit downgrades. On May 20, eight Democratic state and local financial officials sent a letter urging the agencies to maintain independent, forward-looking risk assessments. In August, a coalition of Democratic attorneys general also challenged the Republican attorneys general's criticisms, arguing that climate-related financial risks remain relevant to credit ratings.
California finalizes November deadline for corporate emissions reporting
What’s the story?
The California Office of Administrative Law (OAL) approved regulations implementing the state’s corporate climate disclosure laws on Oct. 12, formally establishing Nov. 10, 2026, as the first greenhouse gas emissions reporting deadline under SB 253. The regulations took effect upon approval.
SB 253 requires U.S.-based companies doing business in California with more than $1 billion in annual revenue to report their greenhouse gas emissions. The first reporting cycle covers Scope 1 emissions, which companies produce directly, and Scope 2 emissions, which result from purchased energy. Reporting of Scope 3 emissions, which include indirect emissions throughout a company’s value chain, begins in 2027, although the California Air Resources Board (CARB) continues a separate rulemaking on reporting requirements for 2027 and beyond.
CARB, which administers the law, also sent reminder letters to companies potentially subject to the requirements. CARB previously identified more than 4,000 companies that could be subject to one or both of the state’s corporate climate disclosure laws.
Why does it matter?
The approval finalizes the initial reporting regulations and confirms the deadline for companies preparing their first emissions disclosures. The requirements extend beyond California-based businesses to qualifying U.S. companies headquartered elsewhere that do business in the state.
CARB is exercising enforcement discretion during the first reporting cycle. Companies may submit previously collected emissions data in several formats. Companies that were neither collecting nor planning to collect Scope 1 and Scope 2 emissions data as of Dec. 5, 2024, are not expected to submit emissions data this cycle, but CARB has requested that they instead submit a statement of non-reporting on company letterhead.
The agency also said it will accept 2026 submissions regardless of whether companies have obtained the independent third-party assurance required by the law. CARB’s enforcement discretion applies to the initial reporting cycle and does not eliminate the underlying reporting requirements.
The Nov. 10 reporting deadline remains in effect despite ongoing litigation challenging California’s corporate climate disclosure laws.
What’s the background?
Governor Gavin Newsom (D) signed SB 253 and SB 261 in October 2023. SB 253 established greenhouse gas emissions disclosure requirements for companies with more than $1 billion in annual revenue, while SB 261 requires companies with more than $500 million in annual revenue to disclose climate-related financial risks and measures to reduce or adapt to those risks.
The U.S. Court of Appeals for the Ninth Circuit temporarily blocked enforcement of SB 261 on Nov. 18, 2025, while litigation continues. The court declined to block enforcement of SB 253.
CARB originally set Aug. 10, 2026, as the first emissions reporting deadline but moved it to Nov. 10 while revising its proposed regulations. CARB released guidance on Sept. 1 outlining the enforcement discretion it would exercise during the first reporting cycle.
Around the world
European regulator sets ESG reporting enforcement priorities for 2026
What’s the story?
The European Securities and Markets Authority (ESMA) released its 2026 corporate reporting enforcement priorities, including increased scrutiny of sustainability disclosures by companies listed on regulated markets in the European Economic Area.
ESMA said regulators will focus on how companies determine which sustainability issues are material and whether their disclosures consistently connect identified risks and impacts with corporate policies, actions, targets, and performance metrics. Regulators will focus particularly on climate change and workforce disclosures.
The priorities will guide national regulators as they review companies’ 2026 annual reports under the European Sustainability Reporting Standards (ESRS).
Why does it matter?
The priorities identify areas where European regulators will concentrate enforcement as companies continue adapting to the EU’s sustainability reporting requirements.
ESMA said companies should provide balanced information about positive and negative sustainability impacts and clearly disclose when they have missed, abandoned, or expect not to meet previously announced targets. The regulator also called for greater consistency between companies’ sustainability statements and other financial disclosures.
From Academia
Report finds banks pulling back from climate commitments
What’s the story?
According to a report from the Transition Pathway Initiative Global Climate Transition Centre at the London School of Economics, major commercial banks have reduced their climate ambitions, with some withdrawing commitments, targets, and policies.
The report assessed 36 banks across 72 climate-related criteria and found that they met 21% of the criteria overall. The share meeting the report’s net-zero commitment threshold fell from 33% in 2024 to 22% in 2026.
The report also found that none of the banks assessed in both 2025 and 2026 set new 2030 sectoral decarbonization targets this year. NatWest, which the report did not assess last year, was the only bank among all 36 to set new short-term sectoral targets in 2026.
Why does it matter?
The researchers found significant regional differences. European banks met 27% of the criteria, compared with 13% for U.S. banks and 6% for Chinese banks. The report said European banks’ stronger performance may partly reflect EU disclosure requirements, while U.S. banks have faced sustained opposition to ESG policies.
The report also found that banks were easing restrictions on financing high-emission companies, including those in the fossil fuel industry.